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Here’s a great screen to run during a solid earnings season like we’re having right now. Literally thousands of companies will be giving us an update over the next few weeks. So far, so good! Stocks are recovering from the pandemic and mostly beating on the top and bottom lines. But you can’t buy them all. However, there’s a tool that can pinpoint the strongest and most stable growth stocks.
We’re talking about the Sales & Earnings Growth Winners screen. Of course, it starts with Zacks Rank #1s (Strong Buys) and Zacks Rank #2s (Buys), but seeks out companies with a Zacks Style Score of A or B for growth as well. It also looks for effective management through ROE and good liquidity through the current ratio.
Learn about three stocks that recently passed the test:
Could you imagine going through this pandemic without GPUs? Actually, that’s not a hypothetical question. The answer is “no”… you really couldn’t imagine it. Because its 2021 and not 1921. Those little chips are essential ingredients to working, learning and playing from home.
So it makes sense that GPU pioneer NVIDIA (NVDA) would be experiencing broad-based strength amid all of its market platforms, which include gaming, data center, professional visualization and automotive. In fact, last week the company stated that first-quarter total revenue is now tracking above its earlier outlook of $5.3 billion.
The news pushed earnings estimates even higher. The Zacks Consensus Estimate for this fiscal year (ending January 2022) is up 16.7% in two months to $13.56, while next fiscal year (ending January 2023) advanced 14.9% in that time to $15.28. Therefore, year-over-year profit growth is at 12.7%.
NVDA is the worldwide leader in visual computing technologies and boasts of being the “inventor” of the GPU (graphic processing unit). Over the years, it has gone from strength to strength, evolving from PC graphics to artificial intelligence (AI)-based solutions that support high performance computing (HPC), gaming and virtual reality (VR) platforms.
The company is part of the semiconductor – general space, which is in the top 28% of the Zacks Industry Rank. Shares are up 17.5% so far this year and approximately 114% over the past 12 months.
NVDA has bettered the Zacks Consensus Estimate for nine straight quarters now. Most recently, it reported earnings per share of $3.10 in its fiscal fourth quarter, which beat our expectation by more than 10.7%. The four-quarter average beat is also right around 10.7%. The result jumped 64% year over year.
Revenue of $5 billion exceeded the Zacks Consensus Estimate by 3.6% and jumped 61% from the same time last year. Robust data center and gaming performances more than offset negatives from covid. Gaming revenues (50% of revenues) soared 67%, while Data Center (38%) jumped by 97%.
Looking forward, NVDA is a company that’s always in motion and looking to break new ground. It’s has numerous growth opportunities, including in ray-traced gaming, rendering, high-performance computing, AI and self-driving cars. In other words, it’s part of all the flashy, futuristic stuff that we’ll be using in the years ahead.
Adobe (ADBE) knows a few things about graphics too… but from the software side. The company’s subscription-based Photoshop platform revolutionized digital creation and design, while a PDF is one of the most basic file formats on the planet. However, that was then. These days ADBE has its head in the clouds… in a good way.
In late March, the company reported strong fiscal first quarter results. But more importantly, it also raised its annual targets. A few of the big reasons for such success was Adobe’s Creative Cloud, Document Cloud and Experience Cloud products, which are helping this name blaze new trails for future generations.
ADBE is part of the computer – software space, which is in the top 37% of the Zacks Industry Rank. Shares are up more than 48% over the past 12 months. It operates in three segments: Digital Media Solutions (72% of 2020 revenues), Digital Marketing Solutions (24%) and Publishing (4%).
The company beat the Zacks Consensus Estimate for a ninth straight time in its fiscal first quarter. Earnings per share of $3.14 beat our expectations by 12.5%, while also improving 38% year over year. Revenues of $3.91 billion surpassed our estimate by more than 3.5% and soared 26% from last year.
Revenues for Creative Cloud were up 31% to $2.4 billion, while Document Cloud rose 37% to $480 million and Digital Experience rose 24% to $934 million.
But the best news in the report was its outlook for the future. ADBE now sees fiscal 2021 revenues at $15.45 billion and non-GAAP earnings of $11.85. Both of these forecasts were higher than expectations at the time and, therefore, led to upward revisions in earnings estimates.
The Zacks Consensus Estimate for this fiscal year (ending November 2021) is up 5.5% in the past 30 days to $11.88, while next fiscal year (ending November 2022) advanced 3.5% to $13.70. In other words, expectations are for profit growth of more than 15% year over year, which could move even higher given ADBE’s market position, innovative product lines and Creative Cloud adoption.
You don’t get to stay a technology powerhouse for long without evolving. We saw it with NVIDIA and Adobe above, and it’s also true with chipmaker AMD (AMD). Being a pure-bred consumer-PC chip provider was cool back in the early 2000s, while everyone was downloading Backstreet Boys songs on Napster. But it’s not enough in today’s hyper-competitive semiconductor space, which is why AMD has become an enterprise-focused company.
Over the past eight quarters, AMD has beaten the Zacks Consensus Estimate five times and matched thrice. No misses. And now it’s scheduled to report again on Tuesday. As part of the electronics – semiconductors space, AMD is in the top 41% of the Zacks Industry Rank with shares that are up approximately 54% over the past 12 months.
In its fourth quarter report from late January, AMD reported earnings per share of 52 cents. The result soared 63% year over year and beat the Zacks Consensus Estimate 10.6%, which makes three straight positive surprises. Revenue of $3.24 billion improved 53% from last year and topped our expectation by 7.5%.
The Computing and Graphics segment (60.4% of total revenues) was one of the big drivers of that top line growth. Revenues jumped 18% to $1.96 billion. Meanwhile, the Enterprise, Embedded & Semi-Custom segment (39.6% of total revenues) rose 176% to $1.28 billion.
For full yar 2021, AMD sees revenue growth of approximately 37% over 2020. Before the end of this year, the company expects to complete its acquisition of Xilinx (XLNX), which is a $35 billion-deal that will significantly help in expanding AMD’s data center business.
Over the past three months, the Zacks Consensus Estimate for this year has advanced 10.8% to $1.95, while expectations for next year are up 7.9% to $2.46. That makes year-over-year profit growth of more than 26%.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
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